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Explaining the Liquidity Trap

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, WJEC

Last updated 26 Apr 2019

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The liquidity trap is a useful concept to use when evaluating the effectiveness of changes in monetary policy in achieving macroeconomic objectives. In this revision video we look at what a liquidity trap is, what can cause it and consider four ways in which macroeconomic policy might attempt to overcome a liquidity trap.

Explaining the Liquidity Trap
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